Saturday, March 30, 2013

The days when you locked and loaded your career in school, and then blasted away down that same narrow path the rest of your life, are gone, never to return. Career survival today requires thinking and acting like an entrepreneur starting a business, staying nimble and resilient, willing to pivot, and supersensitive to the market realities of supply and demand.

Over the years I have spent mentoring entrepreneurs and startups, I often notice the similarities between successful professionals managing their careers and successful entrepreneurs building a business. Reid Hoffman, cofounder of LinkedIn, helped me crystallize these similarities with his book “The Start-up of You.” Here are key survival skills for both lifestyles:

Adopt the mindset of a permanent beta. Finished ought to be an F-word for all of us. We are all works in progress. Each day presents an opportunity to learn more, do more, be more, and grow more in our lives and careers. Keeping your career in permanent beta forces you to acknowledge that you have bugs, and intend to improve yourself.

Regularly assess and refine your competitive advantage. Your competitive advantage is the interplay of three different, ever-changing forces – your assets, aspirations and values, and the market realities of supply and demand. Smart professionals constantly assess the market, and strengthen and diversify skills.

Plan to pivot as you learn. Change is the only constant in this world, and every change is an opportunity to learn. Plan to adapt, and start it every day on the side. Don’t wait for something to fail before you learn, or before you consider a change or pivot. The best pivots are to take advantage of an upside, rather than avoid a downside.

Build and use your network. World-class professionals don’t try to take on the world alone. People playing a solo game will always lose out to a team. Successful entrepreneurs are ones who put together the best teams. Build your network with people smarter than you. With effective networking, who you know is what you know.

Pursue breakout opportunities. Success begins with opportunities, but these mean nothing unless you execute on them. Others taking breakout opportunities can be dismissed as lucky, but more often it’s the result of their work to be at the right place at the right time, with the right mindset. Be curious, confident, and willing to learn.

Take intelligent risks. We are all risk takers. But we are not all equally intelligent about how we do it. In a changing world, minimizing risk is one of the riskiest things you can do. The most intelligent risks are those where the potential downside is limited, but the potential upside is virtually unlimited. Those are the risks every business jumps to take.

Maintain that sense of urgency. Entrepreneurs know that in business, change overtakes the best of big companies, and even startups have to maintain a sense of urgency to stay ahead of the curve. For every professional, opportunities come and go at an astonishing speed, so only a continuing sense of urgency will keep you alert.

In addition to you and the network around you, there is a broader environment that shapes your career potential. It’s the local culture and society around you. So think carefully about where you choose to live and work, or where you choose to start a business. Your maximum potential may be in another place in the global environment, or as a volunteer versus an employee role.

In the bigger picture, I’m convinced that we were all born as entrepreneurs, with the instincts listed above to survive, grow, and prosper. How many of these career survival instincts have you used lately to deal with the changes we all see?

Tuesday, March 26, 2013

This past year, I’ve heard more and more about a new type of small business, called a “micro-business” (or micro-enterprise). These are usually characterized as owner-operated, with five employees or less, and less than $250,000 in sales. With the low cost of e-commence entry, and powerful Internet technologies, they require minimal capital to start, perhaps as little as $500.

I see the potential for these to become big business in this entrepreneurial economy. According to the Voice of Microenterprise (AEO) website, if one in three micro-enterprises in the United States hired an additional employee, the US would soon be at full employment. These businesses are usually run out of the home, and range the gamut from consulting services to e-commerce.

Dal LaMagna, in his humorous book “Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right,” leads with the foundational principle of micro-businesses, which is to start small. This allowed him to learn enough from all his early mistakes to hit it big ($10 million revenue) with a global beauty tools company called Tweezerman. He and I offer additional principles as follows:

Tailor the business to you. Do you love antiquing? Fishing? Cars? Cooking? Now, think about what pursuing this passion might mean for your lifestyle. Think how you want to spend your day; where you want to live; whether you want to work with people or alone; in the morning or at night, and so on. Eliminate any aspect of your business that doesn't create your preferred lifestyle -- and will work against you.

Be frugal. Don't spend money you don't have. Don't invest in anything you don't need. If this means baking cupcakes in the local church basement and delivering your signature pastries by bicycle to local stores -- two dozen at a time -- do it. Take the money you make and put it right back into the business.

Record every expense. From the dollar you gave to the homeless guy on the way to meet a prospective client, to the new tie you bought to look professional, write down every single penny. The key to launching a micro-business is to keep expenses under control and fully accounted for.

Keep a monthly profit-loss. For the first two years of your business, complete a monthly profit-loss statement. This helps you stay on top of where your business is going, where it could do better, and why it fluctuates.

Find free stuff. Many items needed to start and run your small business are available for free or next to nothing. Be creative. Use freecycle.com; ask friends if they have an old computer or printer; or visit a thrift shop for office furniture or office supplies.

Write down agreements. With a very small business, your clients sometimes make the assumption that they don't have to sign an agreement. Wrong. Get in the habit of thinking like a company founder and get promises in writing. And while you're at it, keep your side of agreements.

Keep it simple. When Dal first started Tweezerman, he did nothing but focus on tweezers and selling them to cosmetic counters, one store at a time, which he did very well. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time.

My net recommendation is that if you consider yourself a do-it-yourself entrepreneur, preferring to do things yourself rather than forking over money to consultants, then definitely the micro-business approach is for you. The down side is that you business will probably grow slowly and more organically.

If you prefer to rely on others for most things, or want to get there fast, the investor approach may be the best answer, but the price is higher in time, dollars, and control. It’s your choice, but remember that the wrong choice probably won’t get you there at all.

Monday, March 25, 2013

Every engineer who has invented some new technology, or is adept at creating solutions, believes that is the hard part, and it should be a short step to take that solution to market as an entrepreneur. In reality, that short business step embodies far more risk, and a poor technology solution is not near the top of most lists of common reasons for business failures.

In fact, a Duke and Harvard survey of over 500 technology companies showed that only 37% of their leaders even have engineering or computer science backgrounds. Clearly, engineers should think twice before assuming they have an advantage over the rest of us toward being an entrepreneur.

Now there are many resources out there to help engineer entrepreneurs, such as the book by Krishna Uppuluri, “Engineer to Entrepreneur: The First Flight.” He identifies the key business misperceptions of most engineers, and provides a workbook approach to provide a quick-start on various business lifecycle topics. I’ve summarized his points, and added my own, as follows:

“Everyone loves ‘cool ideas’ and new technology.” Before investing a lot of time and money into any idea, entrepreneurs should assess the commercial viability. That means evaluating third-party market research, getting real customer feedback from prototypes, and listening to concerns of successful executives in the same business area.

“I need to go-it alone to assure quality and elegance.” Engineers assume that the business issues can be resolved later. Working alone, or with other engineers, is great for the average engineer introvert, gives them better control, and minimizes distractions. A team with diverse skills is harder to manage, but more likely to build a thriving business.

“Marketing is fluff and selling is black magic.” The old adage, “If we build it, they will come” came from engineers. In reality, building a solution won’t make it connect with customers, manage competition, or communicate and proselytize the offering in the industry. With today’s information overload, selling is always required.

“We need to get functionality maximized before we focus on customers.” The business reality is that you can’t engineer the functionality right UNTIL you focus on customers. Superfluous functionality, from a customer perspective, is a failure. The mantra for an entrepreneur today should be to ship fast, make changes, and iterate.

“A good engineer hates unpredictability and risk.” A good entrepreneur embraces risk as an opportunity, whereas most engineers are risk averse and cautious. The result is that engineer-driven solutions often are too little, too late, if they ever ship, in today’s fast moving market. Managing risk is good; eliminating risk is bad for startups.

“We can’t worry about making money until we get it built.” If you can’t make money, it isn’t a business. Business constraints, such as market size, customer demographics, manufacturing, distribution, and support costs need to be set, or there is no context for getting it right. Getting it right at the wrong cost will get you no customers.

“Outside funding causes loss of control and undue pressure to deliver.” Funding is like a turbocharger for a startup company, if used correctly. Investors love to fund growth and scaling of a proven business model for entrepreneurs, and they avoid at all costs funding research and development for engineers. Hence the pressure to deliver.

Certainly there are many examples of great companies led by engineers, including Microsoft with Bill Gates, Oracle with Larry Ellison, and Google with Larry Page. This is strong evidence that it is possible to make the step from engineer to entrepreneur, or team with someone who can provide the complementary skills and perspective.

In fact, as Krishna says in his book, the stars are uniquely aligned these days for engineers to be entrepreneurs. The Internet is the great equalizer, allowing all of us to develop broad, as well as deep, skills and insights quickly. With the economy on the rebound, we need more entrepreneurs to satisfy new demands and solve new problems. It is time for more engineers to take the first big step.

Sunday, March 24, 2013

Someday you will be able to ask your browser or smart phone open questions like "Where should I take my wife for a good movie and dinner?" Your browser would consult its intelligence of what you and she like and dislike, take into account your current location, and then suggest the right movies and restaurants. If you are the first to deliver this, your startup might be the next Google!

This has been a long-time dream of Tim Berners-Lee, the man who (really) invented the World Wide Web. He calls his dream the ‘Semantic Web’ (or Web 3.0), meaning it understands user context. He and many other experts believe that the Semantic Web will act more like a personal assistant than a search engine.

If you add the next generation of natural language processing (NLP), you will be able to ask Google Voice Search or Apple Siri the questions right through your smart phone. The system will compile your interests in your local storage, so the more you use it, the more it learns about you, and the more relevant will be the results.

These virtual personal assistants still have some work to do to meet the key attributes that we have grown to expect from a live personal assistant. Here is an entry-level benchmark for the new software personal assistants:

Simple and intuitive communication. A personal assistant must be able to understand intent and context, as well as learn common acronyms and shorthand phrases, whether written or spoken. Siri is a step in this direction, but still has very limited learning and context sensing abilities.

Technology environment savvy. A good assistant know how get things done efficiently, recognizing user hardware and software limitations. In today’s mobile hardware environment, that means able to set up meetings, convert text messages to voice, find contact information quickly, and search the Web intelligently for outside info.

Memorable personality. Every personal assistant has to deal with a variety of moods and people every day. This requires a pleasant, outgoing personality, with politeness and respect always. They must also be able to balance courtesy with assertiveness when necessary to insulate you from unwanted solicitation and other distractions.

Good organizational skills. A personal assistant must be highly organized and detail-oriented. That means total handling of the calendar, scheduling appointments, taking calls, logging messages, screening e-mail and doing other duties with some sense of priority and problem-solving.

I believe the current major drive to mobile devices and apps has slowed the progress toward this new semantic environment, but it’s coming. Of course, many are still fighting it as well, due to privacy concerns. In my view, the increasing consumer demand for personal marketing and personal assistants will soon overcome paranoia, and reasonable boundaries will emerge.

There are already many examples of startups edging into this space. On the basic search engine front, WolframAlpha is an amazing computational engine often used by Siri, which creates intelligent results, graphs, and reports from any natural language question. But we are a long way from agents that can do full natural language processing from voice and think on their own.

Google Voice Search is a tiny step in that direction. A bigger step is a recent personal assistant startup, Maluuba, an Android-based Siri competitor, who just unveiled a new platform to provide app developers with a natural language processing API. The new Dragon Mobile Assistant is fully location-aware and offers several additional proactive assistant features

Current advertising and public relations startups are already poised along these lines, all the way from clothes shopping, art galleries, online advertising, to managing press releases. In some ways, these aren't that different from the old Amazon.com "recommendation engine," which suggests new products based on your surfing and buying habits, but they go much further.

Just think of the fertile ground all this opens for startups! If you’re looking for that ‘million dollar idea’ to build a plan around, here is your chance. But don’t wait too long, because the din for the Semantic Web is getting louder and louder. Catch the wave soon or it will pass you by!

Saturday, March 23, 2013

Probably every one of you who has a business and a website have been approached through email or personal contact, and asked to spend money on paid search results (appear on the first page of search results, right hand column, despite low SEO rank). What most people don’t realize is that, according to new research, 90% of search engine users rarely look at the paid results.

Paid search engine ranking (PPC) is buying advertising for your business from Google or another search engine company. Their computers then cleverly merge your ads with search results when users search words imply an interest in your products. If you sell widgets, and a user is searching for widgets, your ad will appear on the first page of search results for widgets.

This is NOT the same as Search Engine Optimization (SEO). SEO is not placing ads, but tuning your website so that it is more highly ranked by Google, and featured in the first page of results, not in an ad beside the results. PPC is sometimes called “buying your way into search results.” Both have the same end goal of getting people to your website.

With PPC, the goal is for the search user to not only see your ad, but to click on it to get to your website (click-through), and buy your widget (conversion to sale). In this context, there are many parameters and concepts you need to understand before you buy advertising:

Cost per impression (CPI). This cost model is the most like traditional newspaper and television advertising, where advertisers pay for each ad appearance or page-view (impression) on a search result page, even if the user pays no attention. For Google, this is pay per impression (PPI), or pay per mille (PPM) per thousand impressions.

Cost per click (CPC). In this more popular model these days, advertisers do not pay for each appearance of the ad, but only when a user clicks on an ad and is redirected to the advertiser website. For sites displaying the ads, this is called pay per click (PPC).

Cost per action (CPA). Another alternative was added a couple of years ago to mitigate the problem of people clicking just to get paid (click fraud). It pays only if a customer clicks through AND takes a further action (conversion), such as buying a product or filling out a web form. The display side is called pay per action (PPA) or pay per lead (PPL).

Keyword research and budget forecasting. All these models start with the advertiser choosing the right search keywords to match user searches. Popular keywords have higher costs. PPC experts charge you to research, analyze, and estimate hit ratios, to optimize your success and set a campaign spending budget for you.

Campaign setup and ad copy writing. There are many additional variables that the inexperienced marketer may not even think to consider: competition and positioning strategies, budgeting, match types, search and content syndication, and ad copy testing, as well developing the best ad wording and layouts.

Tracking and performance reporting. Advertising is all about getting the most results for the least cost. You may be getting great traffic, but poor conversions. Other PPC experts will track your campaign from click to transaction, providing you with detailed reports on and return on investment (ROI).

If you do all these things right as a search results advertiser, you will make money from selling your product. If you do all these things right by displaying other people’s ads on your website or blog, you will make money from advertising – like Google and Facebook, who offer services for free, and still make millions in revenue.

But either way, it requires big numbers to work (traffic), click-through rates are small, and the pay per click is tiny. Until your traffic is in the millions of page-views per month, don’t expect to live off the conversions or other people’s ads. For credibility with investors, stick to the organic SEO model and other revenue streams until you have the high traffic to survive on PPC revenue.

Friday, March 22, 2013

Many entrepreneurs think that adapting to the new technologies, like smart phones and Internet commerce, are the key to attracting new customers. In fact, businesses need to adapt just as completely to the changes in the buying and social behavior of consumers. High-technology product startups, without customers, don’t make a business.

Today’s customer buying dynamics are all about “user experience,” according to Brian Solis, in his new book “What’s the Future of Business?.” This thought leader in new media asserts that every business needs to understand social psychology and rethink their business models, approach, and relationships in order to create unique and memorable experiences for both customers and employees.

Solis outlines the heuristics of social psychology that are key to building positive customer experiences today. These begin with the following Cialdini’s Six Principles of Influence, that consumers use to make decisions, buttressed by results from various social media surveys he references in the book:

Social proof – follow the crowd. During today’s dynamic customer journey, consumers often find themselves at a point of indecision. When uncertain of what to do next, social proof kicks in to see what others are doing, or have done. Survey results show that 81% of consumers now receive advice through social networking sites prior to a product purchase.

Authority – the guiding light. Perceived authorities guide decision making, by investing time, resources, and activity in earning a position of influence, leading to a community of loyalists who follow their recommendations. 77% of consumers now research online product reviews, blogs, YouTube, Twitter, and Facebook, for authoritative guidance.

Scarcity – less is more. Greater value is assigned to the resources that are, or are perceived to be, less available. Driven by the fear of loss or the stature of self-expression, consumers are driven by the ability to participate as members in exclusive deals. 77% of people like getting exclusive offers that they can redeem via Facebook or other sites.

Liking – builds bonds and trust. There is one old saying in business that is still very true in this age of social media: People do business with people they like. We all have a natural inclination to emulate those we like and admire. Almost 50% of shoppers surveyed admitted to making at least one purchase based on a social media friend recommendation.

Consistency. When faced with uncertainty, consumers tend not to take risks. Rather, they prefer to stay consistent with beliefs or past behavior. When these do not line up in the decision-making cycle, consumers feel true psychological discomfort. The result is that 62% of online shoppers are brand loyal due to other online satisfaction data.

Reciprocity – pay it forward. Perhaps the greatest asset in social capital is that of benevolence. We have an innate desire to repay favors in order to maintain social fairness, whether those favors were invited or not. Every month, over 25 billion pieces of content are shared on Facebook alone, with a major portion oriented toward reciprocity.

Social psychology in general deals with how individuals relate to one another. In today’s social networks, the social economy is defined by how people earn and spend social capital. Based on the commerce of actions, words, and intentions (or actions, reactions, and transaction), people build their own standing. Startups earn relationships and resulting stature the same way.

Another aspect of the social psychology of consumer buying today is the four stages where customers take actions that move them toward you or away from your startup. These are sometimes called the four moments of truth:

Zero Moment of Truth. The few moments before people buy, where impressions are formed and the path to purchase begins. It is that moment when consumers grab their laptop or mobile phone, and start learning about a product or service.

First Moment of Truth. This is what people think when they see your product and it’s the impressions they form when they read the words describing your product.

Second Moment of Truth. It’s what people feel, think, see, hear, touch, smell, and (sometimes) taste as they experience your product over time. It’s also how your company supports them in their efforts throughout the relationship.

Ultimate Moment of Truth. It’s that shared moment at every step of the experience that becomes the next person’s Zero Moment of Truth. This one is required to generating word of mouth, advocacy, and influence.

So for all you technologists, who routinely focus their resources on a great product (“if we build it, they will come”), it’s time to balance the business success equation. Learning how to craft and nurture great customer experiences around your product is critical. The future of your business these days depends on it.

Thursday, March 21, 2013

Many professionals in business, from startups to multi-nationals, assume that team leader or executive is an appointed position, and the skills come with the title. In reality, leadership is best demonstrated while not in a position of authority, and is a skill that must be sharpened every day of your life.

Most experts agree that leadership, as perceived by people around you, is more about behavior than it is about specific skills or knowledge. Darryl Rosen, in “Table for Three?” illustrates this with humor for each of fifty dumb mistakes that smart managers don’t make. The leadership one is setting a poor example by your own actions (“Do as I say, not as I do.”)

His rendition, including the following seven examples of poor leadership behavior, that I have seen all too often in startups, illustrate how your actions affect others around you:

Blame others for everything. An entrepreneur’s passion for an idea often prompts them to blame others or external events for setbacks, rather than themselves, so that they can maintain some semblance of self-esteem and control. This “attributional bias” may be understandable, but is perceived by associates as poor leadership.

Worry and fret about everything. Precious little of what we worry and fret about ever happens, so don’t share every concern with associates. At best, it comes across as lack of confidence, or more likely sounds likely trying to make excuses for possible later failures. Team members want leaders who calm their worries, not amplify them.

Criticize others and the company. Managers who speak critically of team members, customers, friends or family members, have something going on within them that needs to be examined. There is some aspect of self that they find unacceptable. Real leaders are recognized as willing to look in the mirror, and learn from what they see.

Complain about being overwhelmed. Overwhelm is a feeling that always precedes growth, and is a state in which your brain is developing new pathways and connections. Starting a business or a new organization will always cause self-doubt and insecurity. Real leaders embrace and manage these feelings, rather than complain to associates.

Do 10 things at a time in a mediocre fashion. Entrepreneurs or managers who claim to be able to do multiple things at a time must never use this as an excuse for poor quality. Associates will quickly conclude that mediocrity is good enough. Even one task done with mediocrity can be the kiss of death for any business, or any career.

Appear disorganized and manage things haphazardly. Doing things haphazardly is prone to mistakes. In business, when you are making mistakes, it’s costing you time and money. With associates, making mistakes will cost you in productivity and morale, and will kill their image of you as a leader. Worse yet, associates will follow your example.

Fail to see the positives in others. The key here is to maintain a positive mindset. Leadership is all about finding positives, for business growth, for competitive advantage, and people development in your organization. Managers and entrepreneurs need everyone in their organization accentuating the positive, not amplifying the negatives.

Leadership and improvement is about taking small steps forward, and evolving just a bit each day. Think evolution, not revolution. Anyone can change one behavior a month, or eliminate one mistake, and suddenly you too can be an “overnight success.”

Of course, correcting leadership mistakes is only the beginning. There are at least 49 other ways to go wrong in navigating workplace relationships, problem-solving approaches, time management, credibility, and business effectiveness. How many have you avoided recently in your startup?

Wednesday, March 20, 2013

In finance, a bubble is too much money chasing assets, greater asset production and a herd mentality. In startup business plans, a bubble is too many entrepreneurs and too many investors chasing the latest “next big thing,” like Google search engine, Facebook social network, or Amazon e-commerce site. In all these cases, a bust is inevitable, and everyone loses.

The big question is how to spot these bubbles and jump to a better alternative, rather than get sucked into the vortex. Vikram Mansharamani provided some great insights on the financial side in his book, “Boombustology: Spotting Financial Bubbles Before They Burst,” and I believe these can be equally applied to bubbles for startup ideas as follows:

Avoid the herd mentality. In theory, this is called the “emergence of group order” or swarm mentality, where everyone rushes in without regard to whether there is enough food to go around. For startups, investors usually toss business plans with ten or more real competitors, especially if a couple have the penetration of a Facebook or Google.

Overconfidence. In finance, “this time is different” is the beginning of a new bubble. In startups, it is the idea that “this solution is different,” without sufficient analysis of base anchoring features, differentiation features, or no new early adopters. Change is always hard, so people already on Amazon are not easy convert to another e-commerce system.

Supply and demand ignored. We all believe that supply and demand meet to create stable prices (reflexive). But sometimes higher prices create higher demand, causing a boom. Busts result when lower prices stimulate more supply. In startups, a great success like Google causes busts by stimulating more supply, without regard to demand.

Cheap money. The Austrian school of economics asserts that “cheap money is the root of all evil” as an explanation for all boom and bust cycles. This also works for startups, where cheap money occurs when too many investors jump on a bandwagon. Experts argue that a higher percentage of startups fail with too much money, rather than too little.

Policy-driven distortions. Government actions sometimes meddle with normal supply and demand equilibriums, or money allocations. In startups these days, governments are incenting green and alternative energy solutions, to intentionally create a bubble. All too often, that leads to a bust for startups who have not adequately prepared or executed.

High valuation, low profit. A sure sign of a bubble is when assets are artificially valued high, without a corresponding intrinsic value or cash flow. Social media darling Twitter is the most fragile of these bubbles. In my opinion, now is not the time to bet your startup on a Twitter clone.

Every startup wants to be the one to start the next bubble, but these are impossible to predict. It’s much easier to spot current bubbles, and resist the urge to build a “me too” product. The focus should always be on execution, revenue, and profits. Vision, growth over profit, and eyeballs won’t do it this time. Startups that master iteration, momentum, and the ability to pivot will win.

I’m personally looking to Gen-Y as the source of the “next big thing,” that will become the next bubble. To the rest of us, new great things often start out looking like toys, and Gen-Y knows their toys. In addition, they have less baggage, more creativity, and already understand the market segments with the most buying power.

I also believe we are beginning a new wave of startup investing. Angels are becoming more liquid as their stock market and real estate assets recover, and institutions again have earnings to put into venture capital funds. It’s a good time to start some new bubbles and win. Don’t let the fragile old ones burst your bubble as well.

Tuesday, March 19, 2013

Traditional marketing says you have to “push” your message out to customers, over and over again, to get you remembered. A more effective approach in today’s Internet and interactive culture is to use “pull” technology to bring customers and clients to your story. You pull people in by providing new content with real value on your website at least every few days.

Provide good content. This may seem obvious, but how many websites have you reviewed that are static and just plain dull? A website or blog without appealing or entertaining content for your market segment is not enchanting.

Refresh it often. Ideally, you should update content at least every two or three days. Good content that doesn’t change isn’t good for long, and customers or clients will not return to your website or blog if you don’t regularly provide something new.

Skip the flash (and Flash). You may think it’s cool that a sixty-second video plays when people enter your site, or pop-ups occur with every interaction. Most people come with a purpose, and if you won’t let them get to it immediately they won’t come back.

Make it fast. It’s a shame when anyone can get right to your home page, but then has to wait for it to load. With today’s technology, there’s no excuse for a website that takes more than a few seconds to load.

Sprinkle graphics and pictures. Graphics, pictures, and videos make a website or blog more interesting and enchanting. If you’re going to err, use them too much rather than too little, except for a Flash front-end and popups.

Provide a “Frequently Asked Questions (FAQ)” page. People love FAQs because these cut to the chase. Figure out what the most common questions might be and answer them in one place to minimize hassle.

Craft an “About” page. Visitors should never have to wonder what your organization does and why you do what you do. Provide all this information in an About page. Confusion and ignorance are the enemies of enchantment.

Help visitors navigate. Enable people to search your website or blog to find what they are looking for. Also, a site map helps people understand the topology of your website. Forcing paging to complete a single message (to expose more ads) is not enchanting.

Introduce the team. Few people these days wants to deal with a nameless, faceless, and location-less organization. A good “Who Are We?” page solves this problem, and is necessary to establish trust and expertise.

Optimize visits for various devices. No matter what device people are using, your website and blog should look good. These days, 20% or more of your audience will be using smart phones or iPads, and they’re probably the most relevant customers.

Provide multiple methods of access. Some folks like websites and blogs, and others prefer RSS feeds, email lists, Facebook pages, and Twitter feeds. Provide multiple methods to engage people and make these options easy to find.

Let’s face it, static websites are dead. You need a blog and social media interaction to keep your content fresh and responsive to the market. Interaction and repeated visits due to the pull of enchanting content will transform a potential customer transaction into a relationship. Everyone remembers a relationship.

Monday, March 18, 2013

One of the toughest things about running a startup is the feeling of loneliness and isolation. You are on your own and nobody supports you because it’s hard for them to see what you see and feel the excitement that you feel at the critical stages. This is especially true if you run your startup from your garage.

The leadership position alone can cause loneliness and disconnectedness, and that sometimes results in self-defeating behaviors. If your personality already leans toward narcissism, being the boss will likely bring out the worst in you, leading to intimidation, deception, and the use of coercive power. Of course, that leads to further isolation.

It doesn't have to be lonely at the top. Here are some ways to burst through the loneliness of being a founder or top executive, and be the healthy and respected leader of your business:

Join peer business groups. Join business organizations of like-minded executives. They provide a safe harbor to come talk about issues of leadership with other business owners. Groups like the Inner Circle and Entrepreneurs’ Organization (EO) are perfect.

Build a trusted team. Most people by nature get some satisfaction from team interaction, working toward the same goal. Even if your startup is a one-man show, you can find an intelligent outside mentor or advisory board member to bounce ideas off.

Balance home and family. The best leaders are able to maintain a balance in their lives. They have learned to say no. They accept that their families and their subordinates sometimes need to say no. They turn their work into play and then play hard.

Don’t work where you live. Just being able to live and work in separate environments can really help. The change of scenery and external stimulation, whether a coffee shop or just the sunlight, will allow you to switch gears and keep a healthy attitude.

Meet customers online. Use Twitter and Facebook to make connections with clients, customers, and peers online. It helps to socialize with several hundred people all at once, even if you never see them face-to-face, and you can “instant message” one-on-one.

Plan regular networking lunches. Get out of the office on a regular basis to break up the frustrations of daily crises. This combats the isolation that sometimes comes with leadership, helps you broaden your perspective, and gives moments of pure relaxation.

Nurture your charismatic side. Charismatic leaders don’t feel the loneliness, and use a wide range of methods to manage their image. If you are not naturally charismatic, practice diligently to develop these skills of body language and verbal language.

Maintain non-business activities. Hearing about your virtual coworkers going hiking, or just spending some time resting and relaxing can be very detrimental to your self esteem. Work to keep up on your own hobbies, and participate in community action events.

Let a select few see your frailties and fears. Pretending we have it all together only builds the walls of loneliness higher. On the other hand, opening the door to our frailties invites others in. A trusted team member is usually a safe start.

Build a good board of directors or advisors. People under-estimate the value of a good board. Yes, a board does decide whether you stay or go. They probably won't be your friend all of the time. But a good board can collaborate with you openly, provide advice, and provide you back-up especially when taking a risk.

Entrepreneurial leaders can also become de-motivated after working so hard and so long on something for which the reward may be months or years away, or perhaps never to come at all. Motivation, momentum, and clear progress are strong antidotes to loneliness.

But the best antidote to loneliness is successful leadership. This will give you the positive feedback you yearn for, and will allow both you and your business to become more than you ever dreamed possible.

Saturday, March 16, 2013

Every startup and every big business wishes that all their employees were star performers, but wishing doesn’t make it happen. Some coaches and leaders seem to have the magic for bringing out the best in everyone. Research has shown that it isn’t magic, but a focus on engaging people in their work, so that their work triggers the same emotions as play does for you.

Some of you cynics may think that such a thing isn’t possible, but Shawn Kent Hayashi, who has worked for years with entrepreneurs, as well as Fortune 500 giants, argues otherwise. In “Conversations for Creating Star Performers,” she offers examples and ten strategies to leverage conversations into game-changing moments for team members and your company:

Build awareness of expectations. Conversations about what effective performance looks and sounds like are an obvious strategy, but too often found missing. No team member knows what they don’t know, so regular communication from leaders is key.

Understand individual motivators. Star performers are always people who have aligned their work to their values so that they are passionate about what they are doing, and the work will feel like play. Great leaders align the values of work to their team.

Capitalize on the strengths of each team member. When hiring or inheriting new team members, it’s important to discuss their strengths, development areas, and blind spots early. Always try to align people’s roles to their natural talents and interests.

Help team members develop a plan for their future. Take the time to develop individualized development plans for every team member, as a joint effort. Focus should be on current strengths, blind spots, where they want to go, and how to get there

Make new skill development an ongoing priority. Survival in today’s fast-moving business world requires continuous learning and broadening of your skills. You will need to be inspiring and connect the dots to show the benefits of new abilities.

Get people unstuck and back on track. People don’t get back on track unless they know there is a problem. It’s up to you to give the tough feedback, without emotion, while keeping it in context. Then, with clarity, provide the next steps to get back on track.

Support team members in being accountable. Communicate the measurable results expected, and get a commitment for specific action steps and timeframes. Remember that you must role model and reward accountability to get it from your team.

Provide real feedback on their performance. Performance feedback works and is appreciated when it is done often, and in the context of specific accountable actions. Once per year discussions, only when there is a problem, don’t work.

Celebrate successes and even small steps. Always affirm and reward team members often, and criticize infrequently. Experts say it takes five positive interactions to dilute one negative, if we want the relationship to thrive. Create a positive emotional wake.

Develop future leaders early. Successful competition in the marketplace is correlated to a company’s ability to attract, retain, and develop talent. Develop a deep talent pool and it’s never too early for succession planning. This forces you to think about how team members can grow to satisfy their long-term objectives and yours.

A strong and positive business culture is instrumental in bringing out and retaining stars. Top executives and leaders set the culture, but every manager’s actions and interactions with top performers and every team member solidify and drive that culture.

During the recent recession, it was easy to conclude that you have other priorities, and team members would perform at their best to keep their jobs. But keeping a job and top performance at the job are two different things. Now, as business confidence builds, it’s time to double-check how you’re treating all your potential star performers. They will love it or leave it.

Friday, March 15, 2013

I continue to see stories of really young entrepreneurs, like this article on Business Insider, with pre-teens as young as 9 years old who make millions more than their parents. This makes me wonder what starts that entrepreneurial drive in kids, and how early parents and schools should start teaching the basics.

There are already a couple of good books out there for youth entrepreneurs, such as one from my friends Adam and Matthew Toren, Kidpreneurs: Young Entrepreneurs with Big Ideas. They assert, "It's never too early! Even children can be introduced to basic business principles and the rewards of entrepreneurship”. Another one is The Little Entrepreneur by Michael H. and Jay Arrington.

Even if you are not sure that your child is a budding entrepreneur, there are several practical reasons to introduce him or her to the basics of business. Here are a few facts from the National Council on Economic Education emphasizing the need for more business training, starting much earlier:

Only 34% of teens can balance a checkbook.

The average teen thinks they will earn $145,000 per year.

62% of 18- to 24-year-olds are saving very little or nothing at all.

The average college student graduates with $27,600 of debt.

79 percent of high school students have never taken a course on personal finance.

As early as grade school, with parental guidance and resources like these books, kids can gain some valuable experience in starting, managing, and growing a successful business venture. The positives include:

Learn to make money. Even young children (ages 5-10) can and need to understand the concept of income – expense = profit. They need to understand that having money is not an entitlement, and not related to the volume of their demands.

Start a summer business. The best way to learn is a “hands-on” approach like creating a simple business to sell lemonade or deliver newspapers. In this context, parents can explain how their own business works, and where the family income comes from.

Bring the family together. All parents need to do things with their kids. A family that grows together, builds character and achieves financial success. The entire family can be active in the business venture.

Understand how business works. A place to start may be a reality game like ThriveTime for Teens Board Game, where they will be faced with money and life decisions like buying cars, managing expenses, paying for college, using credit cards, buying stocks and starting businesses.

Able to invest money wisely. Several companies, like Charles Swaab, offer programs like Money Matters: Make it Count, which teaches the financial basics to teens through Boys & Girls Clubs across the country.

If your child is old enough to get on the Internet, he or she is old enough to start learning business skills. Many education organizations provide free online tools to help students explore the world, increase intercultural awareness, and participate in a community of like-minded international teen leaders. It’s not a big jump to e-commerce and the costs and decisions of running a business.

We all know that technology comes naturally and early to this generation. Gen-Y is already showing us new ways to use it to grow and profit in business. I can’t even imagine what the next generation will bring. You better start your business now, and have fun while you can, before we are all branded as ancient relics.

Thursday, March 14, 2013

Every entrepreneur has an idea for transforming a market with innovative new technology, or transforming society with a new process. But unfortunately, most of these ideas fail at the execution level, or are not truly innovative. Entrepreneurs who have been really transformative, like Steve Jobs and Walt Disney, seemed to know how to deal with all the right elements.

Jeffrey A. Harris, in “Transformative Entrepreneurs,” provides examples of key elements of transformative ideas and leadership abilities that separate the winners from the losers. I found his observations, like the following, to be inspirational for those of us chasing an entrepreneurial dream:

It’s all about the people. Ideas have to be implemented well to change a market, or the world. Good implementation requires a plan, and a great plan and great operational decisions come from great people. That’s why investors look for entrepreneurs who have true grit, dogged persistence, and a disdain for the status quo.

Seek innovation that begets invention. It doesn’t always work the other way around. According to a recent MIT study, only about 10% of patents granted in the United States have any meaningful commercial importance and less than one percent are of seminal importance. True business titans deliver both invention and innovation.

Find enough venturesome capital. Nearly all new businesses aspiring to reach meaningful scale require some sort of outside funding to finance a competitive growth trajectory. The objective must be to get sufficient capital, with experienced and motivated counsel, to make the venture succeed.

Create a formidable and durable business model. Your business model is your value proposition. “Free” sounds like a great model, but it doesn’t imply value. Look for customer-focused value creation. Make your business model your competitive differentiation, like Fred Smith with Federal Express, or Ingvar Kamprad with IKEA.

Grab the next-mover advantage. First-movers have an initial advantage, but this position is fraught with risk, and often comes with a high price. Herb Kelleher, who started Southwest Airlines, wasn’t the first in the airline business, but he saw the need for low-cost short hauls, with exemplary customer service, and transformed the industry.

Failure is an option. Building a business from a raw start is hard, risky work. That means that the process of innovation is not always pretty and rarely successful. The best entrepreneurs always regroup after a failure, learn from prior mistakes, persevere, and launch a new venture with considerably improved odds of success.

Government matters. Government policies, initiatives, and leadership set the stage for economic growth, and provide resources for improving living standards, and enabling technological advantage. Transformative entrepreneurs pay attention and capitalize on these cues, rather than ignore or fight them.

Innovate or die. In a world connected through a broadband Internet and mushrooming social networks, information flows quickly and relatively seamlessly, expediting the pace at which new innovations gain traction and speed. Standing still is tantamount to giving up. It is not an option.

These elements and the people stories in the Harris book highlight just how difficult it is to build a truly transformative business, yet at the same time illustrate that it can be done, and has been done many times, with no correlation to geographic, ethnic, age, or sexual boundaries.

In fact, I’m convinced that it needs to happen more often, with all the challenges we have in our modern world. So it’s up to each of you to assess your activities, and your potential, to be transformative. The investors I hear from want to see more innovation, and fewer “me too” startups. Can your idea generate some excitement to really change the world?

Monday, March 11, 2013

One of the first questions that I get from many entrepreneurs is “How should I set up my company to minimize my setup costs, tax liabilities, and risk of lawsuits?” The answers are different in every part of the world, but the parameters here in the US should give you the considerations you need in any environment. I’ll offer you a few simple rules of thumb.

If you are certain that you are building a large national corporation with more than 100 investors, and multiple classes of stock, then you might as well start with a Delaware or Nevada C-Corp. If you aren’t so sure, need something fast, or need to keep your costs low, then an LLC is the best legal and taxable entity to facilitate your startup. Here are the key steps:

Form the simplest legal entity early to cover your efforts. Don’t wait for that first investor, the first prototype, or that first lawsuit. Incorporate your startup after the business plan, but before you spend a dollar on product development. The alternatives include a sole proprietorship, LLC (Limited Liability Company), S-Corp (Subchapter-S Corporation), or C-Corp (US Corporation).

While the sole proprietorship is the simplest, it is essentially co-mingling your personal and business assets. The harsh downside is that you might lose your house and all personal possessions if your business fails, or gets sued. Each of the other three has the great legal advantage of limiting liability to the entity, preserving personal assets.

Declare a separate taxable entity to optimize taxes. Many entrepreneurs don’t realize that the tax entity election doesn’t have to match the legal entity. For example, an LLC with two or more members (even husband and wife) will default to a partnership for tax purposes, and report income through Schedule K-1.

Any LLC or S-Corp can elect to be treated for tax purposes as a sole proprietorship (Schedule C) or partnership (Schedule K). Or any LLC can use Form 2553 Election by a Small Business Corporation to be treated for tax purposes as an S-Corp. Now would be a good time to see your lawyer or accountant if you need more details.

The initial paperwork defines the start date of your business. The first step can be done online in a few minutes by filling out Form SS-4 to request an EIN (Employer Identification Number). An LLC or S-Corp or C-Corp requires several more forms to create, and publication in a newspaper. If you do it yourself, this process will likely take a couple of months and cost a few hundred dollars (much more if you use a lawyer).

Every startup business needs annual tax return coverage. For corporations, the annual tax return due date is March 16th in the US. LLCs and sole-proprietorships become part of your personal tax filing package, so the due date for these is April 16th. In addition, corporations have quarterly filing requirements, and even monthly ones, if you collect sales taxes and hire employees.

Upgrade your business entity as required. Legal requirements and tax requirements change as a business grows, so your entity needs to be reviewed regularly. For example, you and your partner may be perfectly happy with an LLC, but venture capital or Angel investors may insist on having “preferred” stock, forcing an upgrade to a C-Corp. A few states, like Delaware and Nevada, offer tax advantages to large companies.

If you need help, there are plenty of places you can go online, like BusinessUSA.gov. If you are totally confused by the online information, make an appointment with a local agency such as your industry association, your local SCORE office, or your nearest Small Business Development Center (SBDC). If all else fails, hire an attorney to guide you through the special cases.

But don’t be misled. Minimizing red tape and taxes is a necessary, but not sufficient, effort to ensure the success of your startup. On the other hand, I’ve seen several innovative and substantial startup efforts derailed by lack of focus on legal or taxation issues. That’s a painful way to die, or wish you had never started.

Marty Zwilling

Disclosure: I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa's. Information and opinions are presented solely for informational purposes, and are not intended, nor should they be construed, as a substitute for legal, accounting or tax advice. You should consult an attorney or tax advisor for individual advice regarding your own situation.

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Sunday, March 10, 2013

Every startup, as well as mature business, needs to learn as much as possible from Amazon, Apple, Facebook, and Google, who have set the standards for fast growth and success in today’s business world. These companies, designated the “gang of four” by Eric Schmidt a couple of years ago, are clearly driving a consumer and business revolution on the Internet today.

According to many technology pundits, including Phil Simon, in his book “The Age of the Platform,” these four exemplify the rise of platforms with applications as a business model, rather than a single product or service. Whether you believe his conclusion or not, you can learn a lot from the lessons he offers on how to build a competitive business model today:

Act small. “Bigness” and all of its attendant problems – bureaucracy, politics, infighting, and the like – put any business model at risk. Bureaucracy and excessive democracy kill speed. Shake organizations up often to avoid stiff and inflexible management structures.

Be open and collaborative. Startups as well as large companies must be open to all sorts of new ventures, partnerships, and offerings. Make application programming interfaces (APIs) open and freely available to developers, partners, and consumers.

Seek intelligent acquisitions, extensions, and directions. Plan on making strategic acquisitions to enhance your core competency, both in terms of depth and breadth. Leverage existing solutions and platforms for extensions, rather than re-invent the wheel.

Make little bets and encourage experimentation. Growth companies in this age develop many different small projects and many ideas. To be sure, a majority will fail, but the most successful product launches often emanate from small ideas and side projects.

Fail forward and embrace uncertainty. There’s nothing wrong with failing, if the bet is small, and you learn from it. Insisting on perfection before rollout hurts much more than it helps. To build a model, you have to be willing to take chances. Safe is the new risky.

Temper expectations and overshoot on technology. Building an effective platform takes time, and is usually slow to show traction. Always buy more computer resources than you need. It’s better to have too much than not enough for a great first impression.

Know when to punt. Many people and businesses stubbornly and mistakenly refuse to adapt to new economics, business realities, and technologies. No one wants to leave a great deal of money on the table, but don’t be penny-wise and pound foolish.

Breadth trumps depth. True platforms are multi-faceted. Having significant depth in one niche area is important, but robust platforms evolve to add a bevy of products, without requiring existing users and customers to learn a new user interface or convert data.

Move quickly and decisively when spotting a niche. Don’t confuse patience with inertia. Waiting too long means that an opportunity may disappear permanently – or someone else may beat you to the punch. Temper expectations, but make the bet.

Use existing tools. It’s time consuming, expensive, and simply unnecessary for every company to create its own tools and base functions (planks) from scratch. By using outposts, businesses increase serendipity, exposure, and cross-pollination.

Building one of the new platforms definitely doesn’t assure business success. Skeptics may point out that platforms have been around since the advent of computers, in the form of operating systems, networks and APIs, yet today the new platforms are becoming table stakes. Businesses with primitive sites cost themselves credibility and customers, and risk becoming invisible to the world at large.

Just as important, the new platform business models can never be finished. Each must continue to expand in many ways and directions. Today’s dizzying pace of change shows no signs of abating. If anything, it is likely to accelerate. So do everything you can to heed these lessons today, to be as prepared as possible for a vastly different tomorrow.

Thursday, March 7, 2013

Most successful entrepreneurs will tell you that their primary motivation is to “change the world” and to build something lasting, not to make a lot of money. But the conventional wisdom is that employees work for money, above all else. Yet my own experience, and a relevant McKinsey survey, leads me to believe that non-cash motivators may be more effective in the long term than financial incentives.

I agree with Charles P. Garcia, who ties motivation most strongly to leadership, in “Leadership Lessons of the White House Fellows,” based on this group of more than 600 prominent leaders from every sector of American society. They assert that employees value having strong leaders, who incent them to do their best, just as much if not more than money.

For action, he provides a list of principles for entrepreneurs and managers alike, derived from his first-hand discussions with some of the nation's greatest leaders. We all need to learn from these as we rebuild employee morale following tough economic times, with limited budgets:

Energize your team. Instead of being the type of leader who sucks the energy away from others, resolve to be the kind of leader who strives to bring passion and positive energy to the workplace every day. Your employees have just helped you pull your company through one of the nation's worst economic periods. It's time they had a source of positive energy.

There's more to life than work. Great leaders have deep reserves of physical, spiritual, and emotional energy, and that energy is usually fueled by a strong and supportive relationship with the people they love, regular exercise, a healthy lifestyle, and setting aside time for reflection.

Put your people first. No organization is better than the people who run it. The fact is that you are in the people business—the business of hiring, training, and managing people to deliver the product or service you provide. If the people are the engine of your success, to be a great leader you need to attend to your people with a laser-like focus.

Act with integrity. In a time when news reports are filled with the stories of private and public leaders who've acted inappropriately and have gone against the best interests of their employees or constituents, showing your employees that you value integrity can help motivate them and create a sense of pride for your organization.

Be a great communicator. Leadership is influencing others, and this cannot be achieved without effective communication. If you're struggling with communicating to your employees, first work on your ability to influence individuals by choosing words that are impactful to carry your message. Then you need to figure out how to communicate to a larger audience.

Be a great listener. The most effective leaders are the ones who take the time to listen not just to their team members' words but to the priceless hidden meaning beneath them. Remember that during good times and bad, sometimes your employees just need someone to talk to. Communicate to them that you are always waiting with open ears.

Be a problem solver. Post a sign above your office door that reads, "Don't Bring Me Problems. Bring Me Solutions." Then set about the task of guiding each person on your team toward the goal of becoming a top-notch problem solver during this crucial period.

Lead through experience and competence, not through title or position. Mentor your employees, encourage them, make partners out of them, and your organization is sure to benefit. If you want to survive the tough economy, that's exactly the kind of leadership motif you need for your organization.

The fundamentals of leadership don’t change between good times and bad. But when money is in short supply, these principles can be the difference between success and failure. Now is the time to start motivating your employees by applying these principles, and your team may actually lead you through the next challenge.

Monday, March 4, 2013

Great entrepreneurs have long been the epitome of people with a great work ethic. But many complain to me that it is becoming harder and harder to find team members and employees who demonstrate and live the same culture. Somewhere along the way, work ethic seems to have been replaced by a pervasive sense of entitlement, especially in the younger generations.

Now is the time to assess your own situation, set out clearly what you expect from each and every team member, and unleash the entrepreneur inside every employee. As a guide, I enjoyed the analysis of Eric Chester, in his book “Reviving Work Ethic,” which provides a leader’s guide to ending entitlement and restoring pride in the emerging workforce.

His focus is on young employees, whose habits and ideals might be more easily moldable. But with people of any age, work ethic is knowing what to do and doing it. Warren Buffett has been a tireless model of this work ethic for the last thirty years. According to Eric, there are seven elements which are essential to an individual’s work ethic, as follows:

Upbeat, optimistic, energetic, and positive. Attitude is nothing more and nothing less than a person’s outward expression of his internal views. A positive attitude at work is infectious, so the more you call it out to others and encourage it in key team members, the easier it will be for you to radiate it throughout your culture.

Reliable, no matter what. Reliability begins with showing up – being where you are supposed to be when you are supposed to be there. It extends directly to your customers through dependable products and services. It isn’t a value that only benefits the employer and customers. It makes for a valued worker, who will stay in high demand.

Neatly groomed, appropriately dressed, and well mannered (professionalism). A professional puts the job ahead of personal norms and desires. Nonconformity is not the culture in most businesses. The best time to address expected norms is before hiring, and mentoring with one-on-one conversations must supplement rulebooks.

Ambitious and dedicated (not satisfied with merely “good enough”). Initiative is all about the discipline of investing now – putting in the effort, sacrificing, doing more than the minimum, rather than waiting for the world to change (“Pay now, play later”). Leaders need to clarify the initiatives they expect to see, and reward exemplary results.

Trustworthy (uncompromising respect). Every job relationship must start with the employee giving respect, before demanding it in return. This means respecting the work contract, coworkers, and the line between work and socializing. Entrepreneurs need to clarify expectations and rule relevance, mentor employees, and reward compliance.

Integrity and coach-ability. Nothing will win coworker respect and admiration like honesty. Aim to be100 percent ethical and above board, 100 percent of the time. Talking about integrity is not enough. You need to call attention to it when you see it, recognize it, reward it, and celebrate it so that it radiates throughout your organization.

Determined to do anything necessary to delight every customer and coworker (gratitude). You need your team members to show gratitude in all phases of their job. In this context, problems are good things to have. A valued employee understands that his job exists to solve problems, so he doesn’t run away from them, but toward them. That will delight your customers, and set you apart from competitors and less-diligent workers.

The Gallup Organization estimated over ten years ago that there were 22 million employees with a poor work ethic, or actively disengaged, costing the American economy as much as $350 billion dollars per year in lost productivity including absenteeism, illness, and other problems. The longer-term problem is slow growth, and an ultimate failure to compete.

Are you and your company part of the problem, or part of the solution? Remember that a poor work ethic by even one person in the organization is a virus, which can spread like wildfire and bring down the whole organization. The antidote is daring to face the work ethic issues in yourself and your company, early and often, to keep you in the ranks of the great entrepreneurs.

Sunday, March 3, 2013

Whether it’s a business or personal interaction, multiple studies show that as much as 50-65% of the communication is nonverbal. That means that people addicted to text messages, twitter, and email may be sending only half the message, and receivers often misinterpret even that half.

Yet the use of SMS text messaging for all purposes, including business, has grown consistently worldwide since it was introduced 20 years ago, to an estimated 7 trillion/year, according to the Quora statistics website. Amazingly, it leveled off in 2012, only due to Twitter, which has already superseded SMS texting in volume of messages. Email volume just continues to increase.

But are any of these text-only messages an efficient and appropriate business tool? Where body language is part of the message, it definitely is not. Let’s look at the most commonly recognized forms of body language, and see how they apply to business:

Eye contact. The eyes are the most powerful part of our body language, and can express everything from happiness, annoyance, interest, to pain. Frequent eye contact is interpreted as honesty and forthrightness. Staring is interpreted as too aggressive. These are obvious in person, but lost in a text message.

Posture. If you are trying to appear dominant or authoritative, stand erect with shoulders back. A slumped position usually indicates insecurity, guilt, or weakness. A dominant sounding text message, on the other hand, generates anger rather than acceptance.

Mirroring. Most people feel more comfortable and open with people in a similar position to themselves. An example would be sitting down to meet with a key vendor, rather than standing to deliver demands. Good managers practice this one for personnel issues.

Handshake. This, of course, comes into play to signal openness or goodwill at the beginning of an interaction, and agreement at the end. Palm-to-palm contact is important for sincerity. This cultural icon is totally missing from text messages and emails.

Hand-to-face. Even when the words sound good, hand-to-face movements such as holding the chin or scratching the face shows concern or lack of conviction. If a person is covering his mouth while telling you something, he may be lying.

Facial expression. A critical message delivered with a smiling face will have a totally different impact than one delivered with an angry face. ‘Smiley face emoticons’ were invented to simulate this in text messages, but they don’t always work, because the sincerity is lost.

Arms and legs position. Folded arms or crossed legs, perhaps turning away slightly, indicates a lack of interest and detachment. Later uncrossed arms and legs may be a sign of acceptance of your position or terms. An extrovert will have toes pointed out, introvert will keep them pointed in. None of these come through in texting.

Space occupied. Some people stand up and move around to be more dominant, maybe even threatening. Even sitting, you can stretch your legs to occupy more space. Standing while talking on the phone will make your voice sound more urgent. Maybe all CAPS will satisfy this one.

Sure, there are many cases where a 10-word text message, or 140 character tweet will communicate a simple message more efficiently than a face-to-face discussion. But most business processes, like negotiating a contract, closing a sale, customer support, or managing employees, are much more complicated than just words.

Overall, the most successful people in business learn to use the right tool for the right job. I’m supportive of using text messaging for agreeing on a time and place for a customer visit, but when I read that text messages are the new pink slips for layoffs, that’s just wrong! I’m beginning to believe that people don’t want real communication anymore.

Saturday, March 2, 2013

Online dating sites usually fail because online dating usually fails. The simple reason is that everyone expects quick results, no one can make that happen, and users get very unhappy very quickly. Even the main industry rag, Online Dating Magazine, admits that the success rate is a mere one percent, compared to an estimated fifty percent for startups in general.

I certainly understand why everyone wants to take a shot at it – the “need” is huge. In the U.S. alone, the target demographic for these services is 90 million singles that are between 19 and 45. Then there are the forty percent of frequent users that are already married. Some say that’s a billion dollar “recession proof” opportunity. The spend is still going up.

But make no mistake about it, this is a tough and oversaturated market to enter at this stage. Here are six key reasons, from a business perspective:

Direct competition is huge. There is no opportunity for “first mover” advantage here. The same Online Dating Magazine estimates that there are more than 2,500 online dating services online in the U.S. alone, with 1,000 new online dating services opening every year. Some estimates say there are 8.000 competitors worldwide.

Online dating fraud is on the rise. Online dating fraud rose by 150% percent in the last couple of years as scammers and hucksters turned up the false charm and predatory trolling, according to a recent article on Mashable. Lawsuit claims and Nigerian con artists are up, and disillusionment is growing. The honeymoon is over.

Entry cost is very high. This business suffers from what Paul Graham calls the ‘chicken and the egg problem‘ – no one wants to use a dating site with only a few users. So sites have to invest heavily in viral marketing to achieve critical mass, which competes with current social networks, while users expect to join both for free.

Intellectual property is tough. It’s hard to invent and patent more “scientific” methods on how to match people. Most people, especially women, don’t even want to feel like they can be ‘matched’ by a computer. E-harmony.com has already defined the 29 DIMENSIONS® of compatibility, how many more could there be?

Social networks. “Social networking” is really the new term for dating, with mega-sites like Facebook, and the hyperlocal site Foursquare. After all, isn’t dating all about making new “friends,” and finding them in all the right places? The latest is Facebook Graph Search, unveiled last month, to help you find the perfect match on the social network.

Sophisticated search engines. I’m already seeing search engine parameters that can match image features, so singles will soon be able to search cyberspace for their ideal partner, without the need to join any dating site. How about the next generation search engine, answering the question, “Who is my ultimate soul mate?”

Perhaps I shouldn’t suggest that no one can win in this space. However, because 99 out of 100 fail, and because some have an unsavory reputation, you won’t find many Angel or VC investors who are interested. Plan to focus on that other popular tier of investors – founders, family, friends, and fools.

Certainly if you expect to get any traction in this market, you need some real innovation. The trend is to more mobile and niche markets. But you better hurry, because potential winners like Dating.Mobi, Herpes-Date.com, and DateMyPet are already taken.

So please don’t send me any more business plans along these lines, looking for investor funding, with no marketing budget, and promising huge returns. Investors are looking for real innovation, not copycats with more bells and whistles. So are customers. Let’s give it to them.